Boosted tax revenue sets the scene for Godongwana’s MTBPS

Finance Minister Enoch Godongwana will deliver the Medium Term Budget Policy Statement (MTBPS) in the National Assembly in Cape Town on Wednesday.

As the term indicates, it’s the National Treasury outlining its policy approach to government finances over the next three years, with a focus on revenue and expenditure performance in the current 2026/27 financial year.

Economists indicate that Treasury reports so far have shown higher-than-expected tax revenues coming into the fiscus, putting national departments on a better footing.

With major economic stress in terms of higher inflation and now higher interest rates, Economists say Treasury has been reporting healthy tax revenues coming in from multiple sources for the past six months, ranging from personal income tax, value-added tax and, importantly, company tax due, in large part, to some buoyant commodity prices.

They expect Godongwana to continue the mantra of fiscal consolidation, which includes debt stabilisation.

There is also an expectation that he may announce a so-called fiscal anchor.

Citibank Chief Economist Gina Schoeman says, “A fiscal anchor simply means that this National treasury is going to do what it has been doing for some years, except it wants to legislate, it wants to legislate what it has been doing, which is running a primary surplus as the means to stabilise debt in the absence of sufficient growth.” Schoeman says, “That’s really the key here is that once we start to grow, if or when we start to grow a lot stronger, because of reforms in this economy, we then wouldn’t need such a fiscal anchor anymore because the growth itself would expand the revenue base and we wouldn’t have to wait for windfalls such as Corporate Income Tax Revenue just because commodity prices are performing.

It would rather be entrenched growth creating sustainable revenue in South Africa.” FUEL PRICES The ever higher fuel prices, which are set to raise inflation even further, have resulted in some wondering whether Treasury might offer further relief, as they did in the second quarter of this year, by way of reducing the fuel levy again.” PSG Chief Economist Johann Els says, “There is some room in the budget, significant tax revenue overruns in a wide variety of tax categories which could present some argument that there’s room to do more, but as they’ve done already.